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A Senate Permanent Subcommittee on Investigations report on JPMorgan Chase's derivatives-trading losses is critical of the bank's risk oversight and regulators that permitted the trades. The case "provides a startling and instructive case history of how synthetic credit derivatives have become a multibillion-dollar source of risk within the U.S. banking system," according to the report.

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Banks are seeing more clients use caps to limit unwind charges from credit- and funding-valuation adjustments. The move lets companies reduce derivatives-trading costs. "It offers comfort and visibility regarding the costs because it protects you from paying so much during unwinds, which is relevant as we are a corporate that manages its debt on a dynamic basis," said Damien Vancraeyneste of Veolia.

A Senate Permanent Subcommittee on Investigations report on JPMorgan Chase's derivatives-trading losses is critical of the bank's risk oversight and regulators that permitted the trades. The case "provides a startling and instructive case history of how synthetic credit derivatives have become a multibillion-dollar source of risk within the U.S. banking system," according to the report.

Minnesota Gov. Mark Dayton revised his two-year budget proposal in response to more sanguine revenue projections. Dayton's new proposal includes an increase in top earners' income tax -- which is expected to raise about $1.8 billion over two years -- but abandons state sales tax changes. Read the testimony of SIFMA's Nancy Donohoe Lancia regarding Minnesota's proposed tax on financial-service sales.

John C. Grugan and Tesia N. Stanley of Ballard Spahr write that the Securities and Exchange Commission's recent focus on municipal bond enforcement action likely will continue. The SEC brought actions in all five of its priority municipal securities enforcement areas in 2012, a trend that will likely persist no matter who is in charge of the agency, Grugan and Stanley write.

Morgan Stanley, Goldman Sachs and other major banks are urging regulators to exempt their foreign operations from the Dodd-Frank Act. More than half of the banks' derivatives-trading operations could be exempted if they succeed.